If you have recently listened to the radio or browsed social media you have probably seen the ads for a new home-auctioning service that has generated a lot of buzz in the Ottawa real estate world.
While auctioning off homes has been a common occurrence in other countries, like Australia and the UK, it has yet to become a norm on this side of the pond. But, is that about to change?
With this combination of the arrival of various auctioneers in the real estate space and buyers fatigued from blind bidding wars on homes during the hottest market Ottawa has ever experienced, the timing for this new trend just may be perfect. Time will tell, but here is everything you need to know about how this could change the home-buying process.
Typically, when multiple buyers are interested in the same property, they find themselves in a “multiple offer” situation. Due to the privacy laws that real estate agents in Ontario have to abide by, no terms of any of the offers may be disclosed to the eager buyers. That means total blind bidding.
This comes with its pros and cons of course — the winning bids could be hundreds of dollars apart from the rest, or it could be tens of thousands of dollars apart. However, this kind of buying process is regulated, so if there is any suspicion about unethical practice the regulatory body can ask for proof of offers.
During an online auction, the interested buyers see the other bids in real-time. There is a predetermined end time for each auction, however this time is extended if the bidders remain active. This brought me back to the days of eBay (anyone else?) and the thrill of that last-minute bid on an item you’ve been eyeing, only to be outbid at the last second.
The winning bidder can have some peace of mind knowing how much more they have decided to purchase the property for above the second highest bidder. But, there is no regulatory body over this process yet in order to ensure that each bidder acts in good faith. Since home auctions have been working well in other countries for many years, chances are some regulations will be put in place in order to protect consumers if this new way of buying and selling real estate sticks around.
Developers in Ottawa have yet to jump on this bandwagon, but we have seen at least one or two builders try out the blind bidding process online, which is sort of the combination of the above-described selling styles.
With the cooling market, we are finally experiencing some shelved inventory which does not bode well for auction-style project launches. So, it’s unlikely that we will see developers participating in this new trend any time soon — and if and when we do, I’ll be sure to let you know!
In closing, the basics regarding the way real estate has been traded in this province have not changed in many, many years. And while it will most likely take a long time for a major transformation of the system to take place, perhaps we are due for a little shake up of the status quo, don’t you think? Stay tuned!